Escape paying the PMI with this thought! Two Mortgages Can Be Better than One!

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Two Mortgages Can Be Better than One


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If your credit score is high enough, you might be able to get a mortgage with no down payment and still avoid having to pay Private Mortgage Insurance (PMI).

PMI is an additional fee that you have to pay if you do not have equity in your home of at least 20%. Typically, you have to pay PMI until you own 20% of your home, at which point, your total monthly payment goes down.

You can avoid PMI from the start even without a down payment by getting two mortgages instead of one. Essentially, you get one mortgage for your down payment and another to cover the rest of your mortgage. Since neither mortgage is for more than 80% of the value of the house, you do not have to pay PMI.

The savings is significant. PMI, depending on the price you pay for your home, can cost a few hundred dollars every month. PMI can continue longer than you think, too. During the early years of your mortgage, most of your payments go to interest - meaning that you build equity in your house very slowly. The end result could be a savings of tens of thousands of dollars!